Health sector reform in Bolivia is based primarily on the principles of decentralization and equity, and with the objectives of improving quality and of expanding health services coverage in rural and low-income areas of the country. As an experiment in reform, the Bolivian Ministry of Health and Social Welfare, the department of La Paz, and the municipality of El Alto signed an agreement with a nongovernmental organization (NGO), transferring to the NGO the overall management of one of the health services networks in El Alto. The transfer was based on a management contract that had process and outcome indicators for the network. A year after implementation began, the preliminary results suggest that through the agreement the quality of management and services has improved, health services coverage has expanded, and the network's primary care services have been strengthened. Bed occupancy rates are generally very low in secondary hospitals in Bolivia, with that figure being just 43% in the department of La Paz in 1999. However, in the second 6 months of operation of the El Alto network the occupancy rate for the network's hospital reached 84%. Between the first 6 months of 1999 and the same period in 2000, outpatient consultations increased by 55% in the network (83% in the hospital and 18% in the network's primary care centers). Over that same period, institutional deliveries increased by 41% and the percentage of deliveries in the primary care centers grew from 5% of the total to 9%. A recent user survey found that 87% of the people receiving care in the network felt highly satisfied with the service they had received, and 75% of the persons surveyed said they would recommend the service to others. These are not typical data for health services in Bolivia. This pilot effort suggests that a change in the organization and management of a health services network, with a separation of the roles of purchaser and provider, combined with management based on results and with community participation in the process, can improve the quality and efficiency of those health services, stimulate demand for them, and increase user satisfaction.